Friday, October 16, 2015

The "Fiscal charter" is about as meaningful as John Major's "Cones
hotline"

Do you remember when John Major as Prime Minister introduced a "Cones hotline" for motorists to call when they thought that there were too many cones on the road? It was ridiculed because we could all see that it was a silly, political stunt. George Osborne's "Fiscal Chareter" is more of the same. And equally silly.

Party politics in our kind of democracy are important. We cannot hold our noses and say that in the national interest Governments should eschew the game of securing Party advantage. If they want to be re-elected they have to do some of this. But passing a Law to create fiscal rules that are intended not just to apply during this Parliament not in subsequent ones is both politically and fiscally illiterate.

Politically it's nonsense because it refers to future events and politics is only played in the past and present tenses. To say that you are by doing this to ensure that a Government in ten years time will be prudent is poppycock. And won't win you one vote. As far as the realities that apply to national and (especially) international economics are concerned the unexpected always happens and you have to react. Ask Gordon Brown! When the Black Swan arrives you have to have all the levers available. No Chancellor would wish to have his freedom to act limited - let alone by a rule established by a Chancellor of another Party ten years ago!